Page 101 - Learn Africa 2021 Annual Report

Learn Africa Plc
Notes to the Financial Statements (cont’d)

For the year ended 31 March 2021

The Board of Directors review and agree on policies for managing each of these risks
which are summarised below:
1 Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss. Learn Africa is exposed
to credit risk from its operating activities (primarily for trade receivables) including
short-term deposits with banks and financial institutions. The effect of each financial
asset is explained below:

a) Trade receivables
Customer credit risk is subject to Learn Africa Plc’s established policy, procedures and
control relating to customer credit risk management. Credit quality of the customer
is assessed based on an extensive credit rating scorecard and individual credit limits
are defined in accordance with this assessment. Outstanding customer receivables are
regularly monitored and any shipments to major customers are generally covered by
letters of credit or other forms of credit insurance.

At 31 March 2021, the Company had 139 customers (31 Mar 2020: 116 customers) that
owed the Company more than $1,000,000 each and accounted for approximately 60%
(31 Mar 2020: 57%) of all receivables owing. There were 15 customers (31 Mar 2020: 13
customers) with balances greater than $10,000,000 accounting for just over 44% (31 Mar
2020: 46%) of the total amounts receivable.

An impairment analysis is performed at each reporting date using a provision matrix
to measure expected credit losses. The provision rates are based on days past due for
groupings of various customer segments with similar loss patterns (i.e. product type and
customer type). The calculation reflects the probability-weighted outcome, the time value
of money and reasonable and supportable information that is available at the reporting
date about past events, current conditions and forecasts of future economic conditions.
Generally, trade receivables are written-off if past due for more than one year and are not
subject to enforcement activity. The maximum exposure to credit risk at the reporting date
is the carrying value of each class of financial assets disclosed in Note 14. The Company
does not hold collateral as security. The Company evaluates the concentration of risk with
respect to trade receivables as low, as its customers are located in several jurisdictions and
industries and operate in largely independent markets.
Set out below is the information about the credit risk exposure on the Company’s trade
receivables using a provision matrix:

101